Keystone Provident Life Insurance Co. might be asked to relocate its home office to Rhode Island if the company is sold by Travelers Insurance Co., a Rhode Island regulator says.

Mark Pfeiffer, Rhode Island Business Regulation Department director, said a Keystone Provident sale needs his agency's approval because Keystone is domiciled in Rhode Island. We would like to have our domestic industry located in the state, he said.A Traveler's spokeswoman said talks are under way with a couple of people to sell Keystone Provident, which has assets of $3.2 billion and 1987

revenues in the $1 billion range. The company has 200 employees.

The issue of Keystone Provident's location arose during a Providence newspaper's probe of Rhode Island General Assembly-issued insurance company charters. The newspaper alleged that some charters were sold without companies receiving state approval.

Mr. Pfeiffer said the law was changed 10 years ago to mandate insurers with Rhode Island charters have their principal offices in the state. He said his agency has not independently determined the number of legislative charters.

Keystone Provident was chartered in 1962 and included in Travelers' 1979

purchase of the Boston-based Keystone Group. Keystone Provident's main businesses are single premium life and single premium annuity products.

Mr. Pfeiffer said his predecessor apparently allowed Keystone Provident to be sold without challenging its location. Rhode Island has lower capitalization requirements than many other states.

Mr. Pfeiffer could not say if he would try to force Keystone Provident to relocate if its sale comes before him; it would depend on what is in the company's interest and what benefits the state might derive. Mr. Pfeiffer can exempt a company from the requirement.

There are two other Rhode Island-domiciled insurers with home offices outside the state, Travelers Indemnity Insurance and Celtic Life Insurance, both in Hartford, Conn. Mr. Pfeiffer said he would not try to get those firms to move to Rhode Island.

The Massachusetts Insurance Department would examine any move by Rhode Island to persuade a Keystone Provident relocation. If it determines Rhode Island has such regulatory authority, there would be no objection, but if the Massachusetts agency questions that authority, we would engage in some discussions with Mr. Pfeiffer, the spokesman said.

The Rhode Island legislature is considering a bill that would turn its power to charter insurance companies over to the Department of Business Regulation. Mr. Pfeiffer said the legislative charter mechanism is deemed archaic.